The Home Depot co-founder insists the US economy has entered a recession

The Home Depot co-founder blasted Joe Biden’s claim that the US is not in a recession, says the economy is down – and added that the president’s economic policies were to blame for the surge in inflation.

Ken Langone appeared on Fox’s “Your World with Neil Cavuto” Friday and said, “This is where we are.” And by the way, I don’t care how you want to define it.

“We can agree on one thing. The economy is shrinking. He is going down. Now whether you want to call it a recession or not – play with words.

“But the fact is the economy is down. Everywhere I look, I see signs of backsliding. … This is something serious. And we are in a recession.

Langone said President Biden was a source of ‘fallback’ and lambasted his focus on green energy policies, which he said ended the energy independence the US achieved under Donald Trump , sending the White House back into the arms of oil-rich Saudi Arabia. Arabia.

“In many ways, this was caused by the policies of the [Biden] administration,” he said. “Today the president is going, hat in hand, to Saudi Arabia and begging them to increase the pipes.”

Langone, a New York native, helped co-found Home Depot in 1974 and is a well-known Republican Party donor.

Quarterly GDP growth is seen over the past four years, showing the pandemic recession of early 2020 and the current contraction cycle

Langone said President Biden was a source of “backsliding” and lambasted his handling of energy policies. The New York entrepreneur is a well-known donor to the Republican Party.

Langone said he was very attached to inflation because it “hits low-income people more than anyone else”.

Earlier this week, Biden sought to assert that the United States was not in a recession. He made the claim despite figures showing two successive quarters of negative economic growth – the classic definition of a recession.

Langone’s warning comes as a key measure of US inflation has risen again, hitting a new four-decade high as the Federal Reserve tries to weather the twin threat of rising prices and the shrinking economy.

The personal consumption expenditure (PCE) price index rose 6.8% in the 12 months to June, the biggest increase since January 1982 and a jump from May’s reading of 6, 3%.

The PCE measure, which is preferred by the Federal Reserve for its flexible 2% target rate, is an alternative measure to the better-known consumer price index, which jumped 9.1% in June from it a year ago.

Both measures are released monthly and use different methods to calculate the price increase for the average consumer.

Excluding the volatile components of food and energy, the PCE price index jumped 0.6% from the previous month after climbing 0.3% in May, another sign inflation is on the rise.

The so-called core PCE price index rose 4.8% on an annual basis in June after rising 4.7% in May.

Friday’s Commerce Department report also showed consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 1.1% last month from May, more than expected.

The rise in consumer spending was theoretically good news for the economy – but almost all of the increase was due to inflation, the report found.

Adjusted for inflation, consumer spending rose just 0.1% in June from the previous month. This was still a gain from May’s inflation-adjusted change of -0.3%.

The latest data comes from a week of turbulent economic news that is forcing the Federal Reserve into a dilemma as it weighs on monetary policy.

The Fed raised its benchmark interest rate aggressively to fight inflation, adding another oversized rate hike of 0.75 points on Wednesday.

But the central bank faces tough choices about whether to keep raising rates after new data on Thursday showed the U.S. economy contracted for the second consecutive quarter.

U.S. gross domestic product fell 0.9% in the second quarter, after falling 1.6% in the first quarter

Raising interest rates is the Fed’s main tool to fight inflation. But the rising cost of borrowing also discourages consumers and businesses from taking out loans, cutting spending and putting pressure on economic growth.

This follows grim economic news that sparked furious debate this week over whether the United States has entered a recession.

The Commerce Department said in a report Thursday that U.S. gross domestic product fell 0.9% in the second quarter, following a 1.6% decline in the first quarter.

Two straight quarters of GDP contraction is the long-standing, informal definition of a recession, but the Biden administration insists the U.S. economy does not qualify as a recession.

President Joe Biden has insisted that the US economy is “on track” despite the slowdown, touting the strength of the labor market.

“It doesn’t sound like a recession to me,” he said during a speech at the White House.

The US unemployment rate has been observed since 1948, with periods of recession shaded in grey. There has never been a recession that was not accompanied by a rapid rise in unemployment

The economy has added more than a million jobs in the past three months, even as economic growth slowed, in another puzzling signal

It is true that most economists are still hesitant to call the current situation a recession.

Unemployment remains near a five-decade low, at 3.6%, and the economy has been adding jobs at a rapid pace in recent months.

There has never been a recession in the United States that has not been accompanied by a rapid increase in the unemployment rate.

Still, the second consecutive quarter of negative growth was a grim warning signal that all is not well with the economy.

“Seven of the nine leading indicators we tracked in June sent negative or neutral signals, pointing to continued weakening economic conditions and possibly a recession,” S&P Global Ratings chief U.S. economist Beth Ann Bovino said. in a note to DailyMail.com.

Apart from the United States, the global economy as a whole is also struggling with high inflation and weakening growth, especially after Russia’s invasion of Ukraine sent oil prices soaring. energy and food.

Europe, highly dependent on Russian natural gas, appears particularly vulnerable to a recession. Repeated rounds of COVID-19 lockdowns in China have also disrupted global trade and supply chains.

In the United States, surging inflation and fears of a recession have eroded consumer confidence and fueled public anxiety about the economy, which is sending frustrating and mixed signals.

Ahead of November’s midterm elections, Americans’ dissatisfaction with the economy has lowered Biden’s approval ratings and could increase the likelihood that Democrats will lose control of the House and the Senate.